How to Select the Best Small Business Loan in Minnesota
The most popular industries in Minnesota are health care and social assistance, accommodation and food services, manufacturing, and retail trade. If you own a business in Minnesota or have plans to launch one, Minnesota business loans can come in handy.
In this blog post, we’ll dive deeper into the funding options that are available to Minnesota business owners and how you can utilize them.
Uses for Business Loans in Minnesota
You can use a small business loan in Minnesota to cover virtually any expense that will help you operate or grow your venture.
For example, if you own a startup; you’ll likely use a loan to invest in real estate, inventory and equipment, marketing, and anything else you need to get up and running. If you own a more established business, a loan can allow you to expand your operations and take your business to new heights.
However, it’s important to remember that there are numerous funding options available to business owners, and their terms and amounts can differ. In addition, your options will vary depending on the lender or provider you work with. In the next section, we’ll further explain how to research and weigh your funding options before starting the application process.
The Top Types of Small Business Loans in Minnesota
When conduct research, you’ll find that there are a wide variety of business loans in Minnesota. The most common options include the following:
Small business loans are usually offered by alternative lenders, banks, and credit unions.
While you do need a good credit score to qualify, you can enjoy a low interest rate and favorable terms. If you apply for a traditional bank loan, note that it might take some time for you to get approved and receive your funds.
If you need fast financing, you may be better off pursuing a loan from an alternative lender. Usually, they have a faster, easier application process than offered by banks.
The SBA works with lenders to provide a variety of financing options to small businesses. They can guarantee as much as 85% of a loan, and work with business owners who can’t secure traditional funding options.
The most popular business lending programs provided by SBA lenders include:
- SBA 7(a) loan
- SBA 504 loan program
At minimum, you’ll need to own a for profit U.S business, invest your own time or money in it, and meet the SBA’s small business size standards.
Business Credit Cards
Business credit cards work a lot like personal credit cards. You can use them to pay for everyday expenses up to your set credit limit. Business cards often come with 0% APR intro periods so you can make large purchases without paying interest for a while. They may also offer perks like cash back and rewards for office supplies or online advertising.
With an equipment loan, you can access the equipment you need without paying for it upfront. This equipment can be anything- an oven for your restaurant, a bulldozer for your construction company, or a printer for your accounting firm. Since your equipment will serve as collateral, equipment loans are usually easy to obtain.
If you need to fund a commercial property like an office building, apartment complex, hotel, restaurant, shopping center, or industrial warehouse, a commercial mortgage can help you do so. You may also use a commercial mortgage to develop an existing commercial property. Commercial mortgage lenders are typically traditional banks, government-sponsored enterprises, GSE-backed mortgage pools, and life insurance companies.
Merchant Cash Advance
If your business is struggling with cash flow problems, a merchant cash advance (MCA) may be the ultimate solution. It can give you the cash you need in exchange for a percentage of your future credit card or debit card sales. While you don’t need to put up any collateral and will likely get approved, a MCA may be expensive.
Invoice factoring is where you sell a portion or all of your company’s pending invoices to a third party. A factoring company will pay you most of the invoice amount right away. Then, they’ll collect outstanding payments from your customers directly. Invoice factoring is another good option if you have a cash flow shortage.
Business Lines of Credit
A business line of credit is similar to a credit card in that you can use it whenever needed, as long as you don’t exceed the credit limit. If you need additional working capital, this could be a viable option for your business.
Resources for Minnesota Business Owners
If you own a small business in Minnesota, be sure to explore these valuable resources.
- Minnesota Chamber of Commerce: The Minnesota Chamber of Commerce offers tips on how to start and manage a business, tips on business succession planning, business financing support, and more.
- SCORE Twin Cities: If you want to find a business mentor, you can get one at no charge through SCORE Twin Cities. In addition to free business mentoring, this organization hosts a variety of workshops and webinars.
- Minnesota Employment and Economic Development: With Minnesota Employment and Economic Development, you can find useful information on a number of topics. These include starting a business, financing a business, finding workers, and labor market analysis.
- EO Minnesota: EO Minnesota is an association of entrepreneurs in Minnesota. As a member, you can participate in networking and social events. This is a great way to surround yourself with other small business owners.
Conclusion: Grow Your Business with Minnesota Business Loans
If you’re committed to launching or expanding a successful business in Minnesota, small business loans in Minnesota are invaluable. When you combine them with the various statewide resources at your disposal, you’re sure to meet (or even exceed) your goals.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.